On October 31, 2023, the Department of Labor released a proposed rule entitled “Retirement Security Rule: Definition of an Investment Advice Fiduciary,” the latest version of its fiduciary rule.

We invite you to join us as we delve into our first take of the proposed rule and what it’s going to mean to you.

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Here is what we know about the rule so far:

Who is considered a fiduciary: The proposal expands the definition to include one-time rollover advice.

Amendments to PTE 84-24: An independent producer must provide additional disclosures and insurance carriers will also be required to supervise rollover sales.

Amendments to PTE 2020-02: The Department did not make any significant changes to 2020-02, but merely proposed clarifying amendments.

Compensation Targeted: The rule could limit compensation agents could receive beyond commissions paid by the carrier.

Timing: The DOL will open a 60-day comment period on the proposal, and hold a public hearing on or around December 18, 2023.

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Regardless of the outcome, CreativeOne will provide you and your practice the tools, resources, and information you need to protect your clients, and your practice….(read more)

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The Department of Labor’s Fiduciary Rule – First Look

The Department of Labor (DOL) recently announced a new Fiduciary Rule, which is designed to protect investors by requiring financial advisors to act in their clients’ best interests when providing investment advice on retirement accounts. This rule is set to go into effect on February 16, 2021, and it marks a significant change in the regulation of the financial advising industry.

The DOL’s Fiduciary Rule aims to address the potential conflicts of interest that can arise when financial advisors are compensated based on the products they recommend to their clients. Under the new rule, financial advisors will be required to adhere to a “best interest” standard, meaning they must prioritize their clients’ interests above their own when providing advice on retirement accounts. This includes recommending investments that are suitable for their clients’ financial needs and risk tolerance, as well as disclosing any potential conflicts of interest.

One of the key components of the new rule is the requirement for financial advisors to provide clear and transparent communication with their clients. This includes disclosing any fees, commissions, or other forms of compensation they may receive for recommending certain investment products. By increasing transparency, the DOL hopes to empower investors to make informed decisions about their retirement accounts and ensure that they are not being taken advantage of by unscrupulous advisors.

The Fiduciary Rule also imposes new compliance requirements on financial advisors, including documentation and record-keeping obligations to demonstrate that they are acting in their clients’ best interests. This shift towards greater accountability and transparency is intended to raise the standard of care within the industry and ultimately benefit investors.

However, it’s worth noting that the DOL’s Fiduciary Rule is not without its critics. Some industry professionals argue that the new regulations may increase compliance costs and administrative burdens for financial advisors, which could potentially result in higher costs for clients. Additionally, there are concerns that the rule may limit investors’ access to certain types of investment products or advice, particularly for those with smaller account balances.

Overall, the DOL’s Fiduciary Rule represents a significant step forward in the regulation of the financial advising industry. By requiring financial advisors to act in their clients’ best interests and promoting greater transparency, the rule aims to protect investors and improve the level of service they receive. As the February 2021 implementation deadline approaches, it will be interesting to see how the industry adapts to these new requirements and how they ultimately impact the experiences of retirement account holders.